What is Compliance in Financial Services

What is Compliance in Financial Services

Financial compliance has flourished only in the broader context of society. It has evolved by addressing the important business, economic and social problems of its time thereby contributing to society. For example finance has long been concerned with the role the company plays in allocating society's resources. Recently, some have begun to question whether the modern corporate form as we know it will be eclipsed by a more efficient organizational form. Another form may be better able to function in a global environment and better server the needs of all its stakeholders. What is compliance in financial services; explain as under:

Historical Development

During the great depression in the 1930 finance was very legalistic and descriptive, dealing with the bankruptcies and reorganizations that were rampant at that time. Following World War - II, it remained descriptive but focused on business investment decisions to assist in the postwar economic boom. In the late 1950 finance took a radical turn. It moved beyond simply describing current practice. It became a science and endeavored to understand the causes and consequences of financial transactions. During the 1960 and 1970 there were important advances in the pricing of risky assets and in valuing contingent claims. Since then, the field has spent much effort investigating asymmetric information and the problems of financial contracting. The focus has been on efficient contracts that achieve the various participants objectives.

The scientific quest for understanding has paid off. Several people have been awarded Nobel Prizes for their contributions to understanding finance.

Contemporary Trends

Three important trends in finance are globalization, computerization and corporate reorganization. These trends are rapidly changing the business world.

Globalization

Lower trade barriers, cheaper and more reliable transportation, and instantaneous electronic communication have transformed business into a global marketplace. Large securities companies, such as Salomon Brothers, trade U.S. Treasure Securities and back to New York in order to maintain continuous markets. So do not think of globalization as only the importing and exporting of such things as cars and wheat. Globalization is much more.

Almost every product and service has some international content. Financial services are now an important part of the global marketplace. Even corporations themselves are more international. Ownership transcends national boundaries as do the capital markets. Your working environment is likely to be multinational and diverse in many ways.

Computerization and Telecommunications

Powerful, low cost computing has become a fact of life. In addition, there has been a simultaneous development of telecommunications media that share database, information, images and even conferencing almost anywhere in the world. Individual companies have thrived and disappeared because of their ability or inability to use technology effectively. Likewise, individual managers have thrived or lost their jobs because they were or were not, willing and able to use computing and telecommunications technology. If you become a financial analyst, you will have access to vastly more information at the push of a button than would have been possible a decade ago. Today, many financial analysts have on their desks a powerful work station that is capable of doing what required a large mainframe computer not so many years ago.

Corporate Reorganization and Restructuring

We have seen a procession of corporate reorganizations, bankruptcies, mergers, acquisitions and spinoffs. Within large and small companies, the managerial and professional staffs have at times, been in turmoil. During a recent period, the Fortune 500 corporations laid off over five million employees. People can no longer expect their first job to be high paying and secure in a major corporation. You are not as likely today to spend an entire career with a single company that dream has been brutally smashed. This reality should provide you with extra motivation for studying finance.
In the past professionals had one or possibly two distinct careers during their working lives and only a couple of different employers. Today's generation of managers may have very different career paths. You may go through three, four or even more distinct careers and you may work in shorter stretches for more employers before you retire.
Today a corporation may be less willing to hire, train and work to retain employees who are not well trained and highly motivated. We sincerely believe that sound training in financial compliance management is critical to your career. Such training provides valuable skills and insights that will enhance your understanding of the nature of business, the marketplace and your place in it.